The 12 most liquid and high-capacity stocks in the banking industry make up the Bank NIFTY index. This index, which was introduced in 2009 and is now actively traded on the stock market, is so popular that many traders make their living only by specializing in Bank NIFTY. The market is currently flooded with Bank NIFTY tips and tutorials on how to trade in Bank NIFTY since many traders who have concentrated on the trading of Bank NIFTY options have developed a variety of bank option trading techniques over the years.
The two Bank NIFTY option trading techniques will be briefly summarized in this article, along with numerous Bank NIFTY tips and Bank NIFTY option tips that may help you learn how to place future trades that are more successful.
Both advantages and disadvantages of Bank NIFTY exist. On the one hand, Bank NIFTY’s strong volatility makes it particularly appealing to traders wanting to make a quick profit because price spikes are more frequent. Due to the fact that any profit margin above 2% to 3% every day qualifies as a successful trading day, this attribute also makes it more enticing to intraday traders. However, it is precisely this volatility that makes Bank NIFTY so dangerous. Simply put, the price is likely to change, and if you can’t keep up, your chances of losing money—along with the amount of money you might lose—are increased.
1. Strategy #1
This Bank NIFTY option strategy applies only to intraday trading.
In your charting software, start by creating a 5-minute Candle Chart. Decide when to start implementing your strategy. The first two candles must be either bullish or bearish at the chosen location. You need to place the purchase order at the high of the second candle if your first two candles are bullish.
The stop loss order needs to be placed at that candle’s low after this is triggered. If the two candles are bearish, on the other hand, you would put your buy order at the candle’s low and your stop-loss order as a buy order at the candle’s high.
A bracket order can also be used to implement this method. Your stop-loss order is currently set at 40% of your candle’s height. The target is set at twice the height of the candle because we are chasing a 1:2 ratio in this case. For instance, if the candle’s height is 40 points, your desired order would be 80 points. It is crucial to remember that if both candles are bullish, you must concentrate on putting sell orders solely, and the opposite is true for candles that are bearish.
2. Strategy #2
This strategy is split into two parts: sell trades and buy trades:
a. Sell trade
You must wait for the chart to fill the gap if the market opens with a gap down (a leap to a lower price from the previous day’s finish). You put a sell order when a candle bridges that distance. Analysis and trend studies indicate that the price will probably decline from here. Therefore, the sell order shields you from this price decline.
b. Buy Trade
The market opens with a gap up, which is the scenario this Bank NIFTY options trading technique is intended for. Once more, you wait for a candle to fill the gap after you spot the market opening with a gap up before moving on to place a buy order. In contrast to the’sell trade’ portion of this method, the price is expected to increase, allowing you to potentially make a profit. Even if the gap is typically filled in a day, according to another Bank NIFTY tip, you should just wait for the gap to be filled in the upcoming days and make your orders then.
These Bank NIFTY option strategies include a crucial stage of setting your targets and stop-losses. Chart a horizontal line starting at the high of the closing candle to determine where the stop loss and targets need to be set. Your buy order is also placed at this time, and it will be fulfilled once the market has corrected to close the gap. At the bottom point of the final candle, the stop loss should be set. Another piece of advice is to set the target at double the height of the candle, which is similar to the prior Bank NIFTY options trading technique. Your aim should be 100 units, for instance, if the candle is 50 units.
Conclusion
An appealing script for investors hoping to earn a quick profit is Bank NIFTY. But because of its volatility, investments are riskier. Trading Bank NIFTY options offers a variety of possibilities. You can progressively start making more profitable trades by utilizing the appropriate Bank NIFTY trading advice and tactics.
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